Growth in Britain’s powerhouse services sector was pegged back last month as firms hiked prices at the fastest pace for nearly a decade in the face of soaring costs.
The latest IHS Markit/CIPS services purchasing managers’ index (PMI) showed a lower-than-expected reading of 53.8 in November, down from October’s six month high of 55.6.
A reading above 50 indicates growth.
Firms in the sector struggled amid Brexit uncertainty, while new order growth was hit as consumer spending suffered a ‘double whammy’ effect of rising prices and weak wage growth, according to the report.
Services firms passed on surging costs to consumers at the fastest rate since February 2008, it added.
Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply (CIPS), said: ‘Businesses could no longer fight against the tide of higher prices for food, fuel and salaries as input cost inflation remained close to its strongest for six years.
‘The level of new order growth lost some momentum, as inflation also ate away at household incomes for a double whammy effect on the UK population reluctant to spend,’ he added.
The result comes as a disappointment after robust performances from the manufacturing and construction sectors last month, while economists had also been expecting a services PMI reading of 55 for November.
But Chris Williamson, chief business economist at IHS Markit, said the upbeat figures from the other sectors of the economy last month should help offset the services slowdown.
He said: ‘Despite the weaker service sector expansion, the latest survey data indicate that the economy is on course to enjoy robust growth in the fourth quarter.
‘The survey data are so far consistent with the economy growing at a quarterly rate of 0.45 per cent in the closing months of 2017.’